Sunday, 23 January 2011

ELSTAT's latest LFS release troubles me in more than one way. 13.5% unemployment is a good reason to be troubled, but I think there's worse news than this to come - and by that I don't just mean more unemployment.

As you know, I monitor LFS for the really juicy data beyond headline unemployment, which like most headline figures is arguably open to manipulation. Sadly this stuff is not available on monthly releases - the figures are just too small to be reliable. The key missing data on a monthly release are: unemployment by educational level, unemployment by nationality, and of course, unemployed with job offers.

Unemployed with job offers will probably have fallen to just under 8% based on the model to date. However, I suspect that unemployment among foreign workers will start to converge with that of natives as public sector and graduate vacancies tail off. Similarly, I think the differential in unemployment between graduates and school leavers will increase. Both of these are bad news because they are tied directly to the possibility of civil unrest.

Thursday, 20 January 2011

The most dedicated of readers may remember this post from our more innocent pre-bailout times, when I noted:

We in Greece do not have to choose between socialism and climate change denial - we believe in nothing and can therefore disbelieve whatever we like.

This was the story of our Minister for Climate Change being told off by our energy unions in a remarkably sub-human way for not being too keen on Brown Coal – our ‘national fuel’ apparently.

Well, she’s in trouble again. She’s come up with an outrageous idea was that it should be illegal to build outside residential zones if they have been included in the Natura programme for the preservation of pristine animal habitats.

Predictably, half the Socialist party pounced on her, citing over-sensitive regulation that will finish off our struggling construction sector, whose output is down 21% from the last year. This strikes me as odd – construction is down because people don’t have money to invest, because house prices are falling and because banks won’t lend as easily. When demand is the problem, deregulation doesn’t really provide much by way of stimulus. Right?

Even more hilarious is the manner, once again, in which the Minister’s suggestion was dismissed. Giannis Vouros, yet another actor-cum-politician popping his greasy locks above the parapet these days, was hilariously quoted as saying:

'This ecology stuff is all very nice but it should not be allowed to turn into eco-fetishism. We can’t expect [people to] sit and think oh where are the pelicans going to be laying their eggs, and derail an entire development plan’

Even so, my friends.

This is a dilemma for me because I find the case for protecting animal habitats compelling. On the face of it, it is much easier to do this if there are clear land use regulations in place. However, I also believe that the less power the Government has, the better. I’ll suspend judgement until we’ve considered the evidence. I haven’t followed very much of that with regards to degradation of animal habitats, but I know a little about the deforestation literature, which works in a similar way.

The evidence suggests that an area is much more likely to be deforested if the level of prosperity of its inhabitants is high, or if the area is mostly agricultural. This is corroborated by evidence that arson is more likely when GDP per capita rises and fuel and wheat prices increase.

Here’s the trick though: the evidence suggests demand for urban and rural living space did not lead to deforestation. Demand for quality, expensive dwellings, however, did. We know because deforestation grows with GDP per capita but not urban demand and because housing booms correlate with deforestation. If the same holds for habitat destruction, it would explain why the Socialist MPs (rightly) point out that regulation will hit construction – because they are referring to demand from well-to-do citizens who have not been affected by the recession.

Of course, structure also matters. The municipal and public ownership of peri-urban forest certainly made it easier to reclassify for other uses (this is important because illegal land use is not very strongly correlated with deforestation), not least by allowing corrupt officials to facilitate the process. On the other hand, deforestation tended to go down as the number of hotel beds increased. Tourists don’t like fires or wastelands and hoteliers don’t like losing money.

So who’s eating up our forests? Subsidised farmers and demand for land by rich folks – through deforestation and arson. How do we keep them from doing this? By making each forest someone’s livelihood (if you can’t stomach making it someone’s property, which I understand), saying no to farm subsidies and of course fighting corruption at the local level.

Now I wonder if the natura habitats can be protected in a similar way.

Wednesday, 19 January 2011

[NOTE: This post was originally posted on 19 January 2011 but was inexplicably deleted.]

I shall give readers a bit of time to ponder the details of the Greek backdoor restructuring mooted today, and see what you make of it. I'll have a read myself and come back with commentary.

The plan I've seen is clever but ultimately it's another risk-smearing bailout. Bank A owns EUR100 worth of Greek bonds. Greece buys the bonds back from them, at the current market price, with money borrowed from the EFSF. The EFSF borrows against the credit rating of the entire Eurozone, so paying back their rates is way cheaper than paying our original creditors. Our creditors lose money (good) and recognise losses (good) but we don't default, which saves a lot of face all around, and we save loads on interest payments.

The plan also changes the current dynamics of the Euro default situation as our debt was increasingly being soaked up by the ECB. Defaulting on debt to the ECB would be a little tricky, and would make the ECB's intervention massively inflationary. Obviously the new plans are an attempt to allow Greece to default on debt to anyone but the ECB - and hence of course German in origin.

There is a small catch here. The plan assumes that our creditors will sell at the market rate. But with the EFSF firmly established as a buyer of last resort, the market rate will almost immediately become meaningless. Imagine the choice: do you want to sell your bonds nominally worth 100 for 60 and recognise a loss of 40, or hold them, supposedly 'to maturity', recognise no loss whatsoever, and dare the Greece/EFSF combo to pay a better price? You know that the longer you wait, the closer Greece comes to default, and the higher the price the Eurobailout tombola will want to pay you. Sure, some people that need the liquidity but are solvent overall will go for this, hoping to get a reasonable price while the ball is rolling. But most will hold onto their bonds until the EFSF prices them at nearly 100 again. Ergo, this scheme only really works for sure-fire default countries, like Greece, and can't be used to get rid of very much debt - it will leave us with about enough debt for Greece to have a reasonable chance of digging its way out, with sacrifices. Alternatively, the plan works very well if creditors can be compelled to sell their bonds.

Here's a clue for the Eurocrats: you can't win like this. For reasons that I explain here, focusing on making Europe appear stronger through guarantees is no good while it's still the weakest link at the global level. Like characters in an unimaginably bad Final Destination sequel, a good deal of Europe's debt has been singled out for death; moving it around simply forces the pattern to figure out another way for the debt to "die". The only way to beef up the guarantees behind Europe is to rope in others, like Japan, or China, or the US. But they all seem to have way more debt on their books than even the Eurozone. (Yes, America, Japan, and even China have debt-to-GDP ratios approaching or exceeding 100%. Although of course Japan is a very bizarre, special case and the Chinese are very good at hiding their debt.)

Right on cue, our PM has asked his team to stop talking about restructuring, called one of the articles discussing this scenario 'malignant and in bad faith' (that's the German article, not the NYT article. we can't have that or his future job prospects might be damaged) and generally took his cyclist's foot and shoved it deep into his mouth.

Tuesday, 18 January 2011

Avid readers may remember the story of the iPhone 4 rollout in Greece, and how our supposedly impoverished population lapped up the latest gadget, which at the time cost the equivalent of a month’s minimum wage. Now, anecdotes are useful for illustration purposes but hard evidence is always best.

To the BatCave then.

Partly out of loyalty and partly because I get their newsletter, I read a lot of LSE publications and am particularly keen on EU-wide mega-surveys feeding central planner porn to EU officials with names straight out of Star Trek.

I was particularly keen to read this latest offering – a survey of children's experiences of the internet around Europe (full report). As expected, this spreads the evidence quite thinly over the Eurocrats’ pre-drafted policy toast: the internet is full of disturbing stuff for children (who, when quoted, seem to be talking mainly about spam, ads and malware – the report plays very well on the double meaning of the word ‘disturbing’).

It also finds that parents need help controlling what kids see and are grateful when nice social workers give them a ‘toolkit’ for doing this. War is peace. Freedom is slavery. Ignorance is strength.

Amidst all of this muppetry, I found a massive gem. Feast your eyes, friends, on the chart below, taken straight from the report. Apparently two thirds of Greek kids access the internet on their phones. That’s twice as many as in the UK and over 1.5 times the percentage of the second-ranked country. Another 12% uses other handheld devices which I suppose range from Blackberries to PDAs, iPads and the like.

Wow. This, by the way, is not a sampling error of some sort. The Greek sample is 1,000 strong, and the Greek internet-accessing sample is 87% of that. It is also not a matter of timing as the Greek fieldwork was carred out between 10 May and 2 July 2010. So overall, 68% of Greek kids browsed, post-IMF, on a mobile device and the error attached to this estimate is tiny. Not too shabby!

Next up, EU poll shows an alarming number of Greek pets have gold-plated teeth.

Sunday, 16 January 2011

There are few people left in the world who don't believe Greece will default, outside of our ever shrinking circle of creditors, none of whom are actually spending their own money. I imagine that a year from now, Trichet will be left on his own in the no-default (and long Greek debt) camp, his eyes sewn shut, scrawling 'Greece will not default' all over the walls of his office in his own excrement.

In the meantime, our own Government is still on the default denier camp, as indeed they must be until we're 100% ready to flick the entire financial world the notorious Focus finger. This is fine, and in the national interest. However, it would be nice if, in maintaining appearances, the Government would try to avoid building our whole nation a reputation for being petulant, ignorant idiots. Part of this involves conceding that talk of a Greek default is based on some objective facts, and explaining that we're doing our best to change these facts. Simply put, no one thinks we can grow fast enough to get out of debt before we're overwhelmed by the rising interest payments. We should be telling foreign commentators that we're reforming in order to enable growth, that we have a plan for where growth will come from and that we're winning concessions on the terms of our external financing. That would do.

UPDATE: Many thanks to my journo friend M.S. for pointing out that it was the Focus finger after all. Schoolboy error brought to you by Google Image Search.

"Based on this assessment, the credit downgrading of Greece’s sovereign rating by Fitch Ratings by one notch (BBB-to BB +) with negative outlook underlines the need for a new framework for rating agencies at a European level."

"If you think Greece will default, you are an instrument of teh evil specuLOLtors. Well, we still have some MEPs and a seat at the Council left and we'll make you pay for this by setting Commissioner Barnier's dogs on you. We'll show you who's Junk-grade."

This might be problematic as Barnier's dogs have already been found to be barking up the wrong tree regarding speculators' bets on Greek debt. And of course, people like Dagong who, like us, feel that the credit rating agencies are subject to political and speculative manipulation, tend to think they have overestimated Greece's creditworthiness.

UPDATE: It doesn't help that our Government has been in talks with both Moody's and Fitch about avoiding a two-notch downgrade and managing the fallout for bank balance sheets, and we seem to getting our way. There's a saying in Greece, "Don't lick where you once spat."

"there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met."

Which sounds entirely fair. A BB+ rating also implies a probability of default that is less than 10% over 5 years. I know Fitch doesn't say this anymore, but that's the benchmark. Now, I dare anyone to sit in front of a mirror and say the words 'the probability of Greece defaulting over the next 5 years is less than 10%' three times. Apparently the ghost of Charles Ponzi shows up and drags you to hell if you do.

The Government's correct reaction would be to point out that since the market has priced in a 56% to 75% probability of default already, Fitch is giving us some very good news indeed and everyone should buy our massively underpriced bonds. Or we could just be honest and tell Fitch that they're always lagging our credit situation (and everyone else's) by about 6 months so no one believes them anyway. They're basically peddling tabloid celebrity breakup stories for the financially educated. Everyone just makes up the stories and when the truth comes out they are as surprised as the rest of us but still pretend to have known all along.

But no! Telling the world to fuck off even as we beg our creditors for more time to pay off their loans is apparently the way to do it. Because making us all look like idiots somehow makes the Greek Government feel better about themselves.

UPDATE II: It's important to note that by default I mean any credit event which leaves our creditors holding Greek debt whose present value is less than what they originally held - and which forces them to recognise losses on the P&L. Some restructurings of our debt and of course any haircuts will constitute defaults.

Saturday, 15 January 2011

Foreign readers may not have noticed a key piece of Greek news this week, amidst coverage of the 'successful' Spanish, Portuguese and Greek debt auctions (courtesy of the ECB, Japan and friends), Portugal's direct sale of EUR1.1bn to the Chinese, as well of course as the news that all of the Maghreb and beyond is in flames over sugar and other commodity shortages. This is of course important news as it demonstrates that the world is about to go to shit big time, but the news coming out of Greece should worry people just as much.

The cover story is that TV-heartthrob-cum-mayor Apostolos Gletsos has taken it upon himself to tear down a toll barrier with a tractor after realising his constituents had to pay tolls to travel within the municipality. Clearly an absurd proposition to which the good mayor rightly objects, but his very photogenic piece of activism comes in the context of a nationwide movement against tolls, amply supported by Greece's abundance of orange blogs. Members of the movement need only shove the toll barriers aside.

At first I did not realise how many people were involved in the movement, until I heard that toll operators had applied for permission to photograph and invoice maverick drivers and that the government had announced they intend to renegotiate road maintenance contracts. Before I knew it, all manner of institutions had thrown their varying weights behind the movement, from the Communist Party to a popular football club and even some elements within our ruling Socialist Party.

The arguments employed by the movement vary substantially, but those that make sense tend to be as follows:

The original licences granted for the building or maintenance of roads were abusive - allowing contractors to levy tolls long after their original outlay plus reasonable profit had been recouped and refusing to reward frequent users with a monthly or annual scheme. This is probably a fair point as fixed-term concessions have been shown to have this effect under demand uncertainty. There is also fairly robust evidence that, at 85% of total motorway costs, capital accounts for a larger share of the cost of running Greece's roads than those of other countries. But the solution, as this study proves, is to adjust the concession terms, not to refuse payment.

The Greek Constitution guarantees the free movement of citizens in the Greek state and any infrastructure built with the people's money should be free at the point of use. This argument is faulty to the extent that all arguments in favour of free-at-the-point-of-purchase are: it is simply a demand for subsidies which may or may not be justified by the externalities produced by road transport. However it does raise the valid point that road regulation is only a partial substitute for public ownership and cannot ensure universal coverage. In fact, even though roads are a classic public good, their benefits even through externalities are much more likely to accrue to their users and neighbours. Therefore, some element of tolling and local authority funding needs to be maintained at all times.

Each driver pays road duties, ostensibly in order to buy access to the road network. This should cover all roads in the land. This would be a reasonable argument if tolls hadn't been common in Greece for decades. A person my age has known tolls to exist all of their lives and older drivers will have known them as long as the fancy motorways they helped finance. It is not part of the social contract, so to speak, that road duties equal access to all roads.

The toll system creates abusive monopolies as there are few safe alternatives to the tolled motorways. This is also a fair point, and in fact it has been proven that tolls can reduce road safety outcomes overall.

The system whereby these contracts were allocated is corrupt and therefore all contracts are null. While corruption is undoubtedly a problem in Greece, much more evidence would be required before the contract for an individual section of motorway can be challenged, and it should be up to the law to decide when and to what extent such challenges can take place.

The quality of Greek motorways is very poor and thus current toll levels are not justified. Perhaps; subjective evaluations for the Global Competitiveness Report suggest that Greece's roads are, at no. 57, worse than Rwanda's. This would be a good argument for renegotiating contracts; in fact, periodic quality assessments should have been incorporated into the incentives provided by the original contract. But it's not a good argument for not paying at the point of use, unless the road is in fact unsafe or unusable.

The problem with this movement is that, frankly, the Greek state needs to honor its contractual obligations. We collectively chose, at some point in the past, to saddle our future selves (and our children) with the cost of paying for these roads rather than pay tax for them. Now we don't want to pay the tolls either. Well, roads don't fund or maintain themselves. If this movement manages to do what it has set out to do, it will demonstrate that, in some cases, the people can effectively repeal the signature of the Greek state and default on any collective obligation. This is not a statement to be made lightly: our credibility depends on an implicit commitment not to abuse our ability to default.

The state's credibility also depends on its ability to impose its commitments upon the people - this is essentially equivalent to its ability to regulate or levy tax. Anything that weakens investors' perception of these two is bad for Greece because it means fewer people will be willing to finance our continuing deficits.

Thursday, 6 January 2011

I blogged last night about the age-old conspiracy theory of how Greece’s endless reserves of natural resources have been hidden from the sainted People in order to keep Greece under the thumb of evil powers. And of how the Government now appears to be taking cues from these tall tales of life-changing resource reserves in order to dole out more of other people’s money to its favourite rent seekers.

Me, I hope we never find oil in my lifetime. And to save everyone a bit of extra money, I hope we never go drilling in the first place.

Why wouldn’t anyone want oil, or gold or the very rare and expensive element LOL-ium, which literally jumps out of the ground in Greece? As one commentator put it:

Let’s not take a one-sided view – natural resources are a public good that NO-ONE has said no to… on the off chance that it ends up leading them astray. Whoever feels weak can sit this one out. Professors should stick to their schools, analysts should stick to their forums, layabouts should stick to their cafés. And those of us with a passion for creation should man the battlements.

[I note this person was not writing from the Sudan and seems to have a lot of time on their hands. Methinks they do not create very much up there on the battlements.]

Since before the widely-cited paper by Sachs and Warner back in 1995, economists have known that growth was, on average, slower among resource-intensive nations. This effect was sensationally dubbed the ‘resource curse’ or ‘oil curse’ and was found to manifest itself in many unpleasant ways (reviewed here). Among other things, people argue that natural resource reserves fuel conflict and civil strife, drive corruption (including a lack of transparency in the private sector), and kill investment.

Not everyone agrees, of course; fans of the ‘big push’ school say that the discovery of natural resources can create rents which give rise to investment and development. Proponents of oil exploration claim that as long as a country’s institutions are sound to begin with and the economy is diversified, oil abundance can be good. In particular, they explain that oil dependence is the problem, not oil abundance. However, this begs the question of how long institutions can remain sound following oil discovery, and whether oil abundance can be kept from turning into oil dependency.

A very instructive and well-studied natural experiment in São Tomé and Príncipe revealed that corruption jumped substantially following the discovery of offshore oil reserves in 1997-9, and established the mechanism through which this came to be. Basically, rent-seekers went absolutely apeshit, savagely elbowing their way into power in time for the oil bonanza. This led to widespread vote-buying as well as widespread peddling of state jobs and access to elite education. I am particularly keen on this paper because its approach for measuring corruption is the same as the one I propose here. Generally speaking, having factional or personalised politics to begin with can get an oil-rich country off to a very bad start. Sound familiar?

In fact, I would argue that Greece has already had its own institution-corroding oil bonanza: it’s called EU membership. See here and here for my past commentary but also see here and here for how much EU funds acted like a resource bonanza, slowly replacing our export base.

The premise of this new Greek oil push is that it can pay off our national debt. That sounds like hopes of oil dependency, not abundance, to me – swapping our addiction to debt for an addiction to oil. In fact, if we are to avoid the resource curse, the literature suggests that it is important to save rather than spend the actual revenues. This is what countries like Norway do, putting revenues into a fund so that they do not directly feed into aggregate demand, or indeed the government budget. Chances of this catching on in Greece? ZERO. One could argue that paying down debt would also be saving of sorts but I doubt it will fuel investment in any meaningful way.

One of the most intriguing studies claims that there is no oil curse as such, and that oil reserves can help push countries out of the Malthusian trap by boosting fertility (through migration) and thus, in the presence of externalities, economic growth.

First, if the authors of this study are right, Greece can only reap the benefits of oil discovery through mass immigration. Something tells me that, unlike the corporate types at Energean, the nationalist nutcases behind our ‘big push’ aren’t ready to welcome millions of immigrants in the name of oil, especially considering the fact that they will mostly be Turks settling on islands near Greece’s border with Turkey.

Even then, however, all is not as it seems. Flip to pg 24 of the study and you will find that it is basically oil price booms that account for most of the positive effects of oil discovery. Or turn to pg. 32 to find that, after accounting for extreme outliers with unreliable data (basically the UAE), the negative correlation between per capital GDP and oil comes right through – it just doesn’t hit home until two or three decades post discovery, when there’s FA anyone can do about it.

All of this leads me to add one more scenario to the five I discussed last time. It is possible that past Greek Governments, in their boundless wisdom, had chosen not to engage in oil prospecting precisely in order to avoid the oil curse. Our current Government believes that, with the quality of our institutions now controlled by our creditors and thus exogenous, it may be an excellent time to embrace the resource bonanza without fear of the resource curse.

While idly going through channels the other night, I stumbled across a well known show popular with conspiracy theorists, sporting a screaming headline along the lines of GREECE HAS OIL, GOLD, URANIUM AND LOL-IUM BUT OUR GOVERNMENTS HAVE CONCEALED IT FROM US!

This is one of many recent shows following this premise, sporting the usual line-up of has-beens from the worlds of politics, science, journalism and, inevitably, international relations. I am no expert in oil or energy markets of any sorts and will not pretend to be one. I am, however, a big believer in the corrosive power of conspiracy folklore and there is a great deal in this new trend of economic escapism that worries me. It is as though some Greek commentators, when faced with the pre-IMF dilemma of ‘Germany or Albania?’ chose ‘Nigeria’ instead. Or as one commentator put it,

When you’re having the time of your life and suddenly the lights go on and you’re told the party is over, what do you do? Someone pipes up and says: ‘why not go to the bar next to my place and keep this up?’ And the crowd goes ‘Yeeeah!’

The story of Greek oil begins after the 1973 oil crisis, when the Greek government encouraged through concessions the prospecting for oil in Greece, culminating in the discovery of the Prinos oilfield off the coast of Thasos (a geological profile and history of exploration is available here). Things got very hairy in 1987 when Greece threatened Turkey with war in case prospecting was undertaken within a part of the Aegean sea that Turkey disputed, but which Greece believed to be indisputably Greek. This dispute forever poisoned the chalice of Greek oil prospecting as potential prospectors would have to restrict themselves to territories entirely beyond question, where they invariably failed to find much oil.

[A Greek perspective on the 1987 story can be found here; and a contemporary American perspective can be found here. Please contribute a Turkish perspective if you can; most appear to be in Turkish, which I can’t read. For now I note from the very interesting note by @Ahmet that the same bonanza-rific circle-jerk has been going on in Turkey. Many thanks!]

The latest craze was started in 2007 when newly-founded Aegean Energy (now apparently Energean Oil & Gas) took over the dying previous operator, Kavala Oil and started to pour $200m into the operation (full background here if you scroll down to the middle of the page; original source behind paywall here). Energean has now revived hopes of serious oil yields from Prinos and the newly completed Epsilon well. Even our own Government has joined in, claiming that Greece could produce a total of 40m barrels per year. In fact, it proposes that a state company entrusted with the exploitation of these resources be formed right away, even though it admits that the existing research into Greece’s potential for oil production is ‘fragmented, discontinuous and incomplete’. The rationale is that lacking such an agency costs us valuable income and that we’re the only EU country not to have one.

Unfortunately for the cause of sanity in economics and foreign affairs, the name of the promising Epsilon well plays straight into the hands of a bizarre eschatological conspiracy theory indigenous to Greece, which looks forward to the decisive intervention in the near future of the Epsilon Team, variously defined as a spacefaring group of Greek übermenschen or a collection of earth-bound industrialists and scientists with a Greek nationalist agenda. Take a few minutes to digest this before continuing.

Right.

Worse still, the kernels of truth in the mythos of Greece’s supposedly vast oil reserves have given rise to an enormous literature of conspiracy theories about how we Greeks are sitting on mountains of natural resources but our successive Governments, despite a record of raiding every other piggy bank in sight like some cocaine-addicted Houdini, somehow kept their hands off these because they were told to by their foreign / satanic / reptilian / Jewish masters. [For the uninitiated: The reason being that this vast wealth could have kept Greece out of debt and therefore ensured our continued independence.]

How ironic, then, for the conspiracy theorists, that one of the people most invested in Greek oil pipe dreams, the Chairman and Managing Director of Energean, one Mathios Rigas, was a Chase Manhattan Banker in the 1990s – the same bank Tro-ma-ktiko insists was busy masterminding the loss of Greek sovereignty during that time.

Worse, the timing of the Greek Government’s consultation into the creation of a new agency for the exploitation of our mineral wealth (it was directly preceded by a barrage of oil myth TV shows) suggests that one of the following is true:

1. The Greek Government is responding to this latest version of a conspiracy theory that has been making the rounds for decades because they are desperate for money and are willing to try anything.

2. The Greek Government is making a show of responding to this latest version of the conspiracy theory because they want to be seen to be doing something in the national interest for a change and knows that any kind of 'good news' could provide a psychological boost. It does not actually intend to follow through with the consultation.

3. Rent-seekers are using a well-established conspiracy theory which neither they nor the Government believe in (but which the people generally do believe) in order to create jobs and subsidies for themselves.

4. Rent-seekers are trying to seed within government a well-established conspiracy theory in order to create jobs and subsidies for themselves.

5. Greek and Turkish diplomats have hit upon a formula for joint exploitation of oil reserves which could make oil exploration profitable once again but need to over-sell the benefits of oil to their respective peoples in order to avoid a nationalist backlash.

Whichever is the case, our history suggests that Greece has only ever looked to oil either as speculators, as in 1973, or in desperation, as today. It is also clear that the higher we raise the stakes of oil exploration the more we will inflame the open sore that is the sea border dispute.

A small review of the economics of the oil curse will follow in due course. I strongly urge any Greek readers to respond to the consultation and kill the new quango before it hatches.

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LOL GREECE is a non-revenue blog intended as evidence-based and occasionally satirical commentary on the state of the Greek economy. The author, Emmanuel (Manos) Schizas, holds both Greek and British citizenship and is a permanent resident of the United Kingdom, where he is employed and duly taxed. The rest of his family (both parents and one brother) live in Athens.

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